The Dy.CIT, Agra V. Sri Vikas Jain, Agra

ITA 294/AGR/2009

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0322 (ITAT-AGRA)
• Duration Of Justice: 9 year(s) 9 month(s) 22 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 03-03-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 24-07-2009
• Court: TRIBUNAL
• Department Lawyers: HOMI RAJVANSH
• Assessee Lawyers: K C AGARWAL
• Keywords: Unexplained cash credit; Unexplained investment; Sale consideration of property below Jantri Value; Capital asset; Business income; Loose papers; Charitable institution; Source of fund; Cost of acquisition; Date of conversion; Assessment record; Set aside
• Section: 45(2); 50C; 131; 68; 69; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 294, 295, 296 & 297 /AGRA/2009 ASSTT. YEAR : 2003-04, 2004-05, 2005-06 & 2006-07 DY. COMMISSIONER OF INCOME-TAX, VS. SHRI VIKAS JAIN, CENTRAL CIRCLE, AGRA. 17-18, GOPAL KUNJ, NEW A GRA. (PAN AARPJ 3218 L) FOR APPELLANT : SHRI HOMI RAJVANSH, CIT, DR. FOR ASSESSEE : SHRI K.C. AGARWAL, ADVOCATE. ORDER PER BENCH: ALL THESE APPEALS HAVE BEEN FILED BY REVENUE AGAI NST THE ORDERS OF THE CIT(A). FOR THE SAKE OF CONVENIENCE, ALL THESE APPEALS ARE DISPOSED OF BY THIS COMMON ORDER. ITA NO. 294/AGRA/2009 (A.Y. 2003-04): 2. THE FIRST GROUND IN THIS APPEAL RELATES TO THE A LLOWING OF RELIEF OF RS.4,50,000/- OUT OF ADDITION OF RS.6,50,000/- BY THE CIT(A). THE BRIEF FACTS RELATING TO THIS GROUND ARE THAT DURING THE COURSE OF SURVEY AT THE BUSINESS PREMISES OF M/S. P ADAM CHAND SATYA NARAIN, MEWA KATRA, AGRA, A NUMBER OF LOOSE PAPERS WERE FOUND AS INVENT ORIZSED IN ANNEXURE A-22 TO 24. THESE ARE THE BUNCH OF KACHCHI PARCHIS ON WHICH DATES, NAMES OF PARTIES, WEIGHT, PURITY AND AMOUNTS IN RUPEES ARE MENTIONED AND RELATED TO THE SALE OF SIL VER ORNAMENTS. AMOUNTS CHARGED AS MAJDOORI WAS ALSO MENTIONED. THE WEIGHT OF THIS FINE SILVER ORNAMENTS DURING THIS ASSESSMENT YEAR WAS 1668 KGS. THE RATE OF FINE SILVER AS ON 31.03.2002 WAS RS.7,875/- AND AS ON 31.03.2003 WAS RS. 7,695/-. SINCE THE ORNAMENTS WERE SOLD THROUGHOUT T HE YEAR, THEREFORE, THE AVERAGE RATE WORKED OUT TO RS.7,785/-. THE ASSESSING OFFICER WAS OF THE VIEW THAT THIS REPRESENTS THE UNDISCLOSED SALE 2 MADE BY THE ASSESSEE AND ACCORDINGLY, HE ESTIMATED THE VALUE OF SUCH UNDISCLOSED SALE BY MULTIPLYING 1668 KGS SILVER ORNAMENTS BY RS.7785/- AT RS.1,30,00,000/-. THE ASSESSEE CLAIMED EARNING OF PROFIT @ 2%, BUT THE ASSESSING OFFICER W AS OF THE VIEW THAT OTHER PARTIES IN THE SILVER LINE OF BUSINESS HAVE SHOWN THE NET PROFIT OF ABOUT 5% ON THE SALES DURING THE ASSESSMENT YEAR. EVEN THE ASSESSEE HIMSELF WAS SHOWING NET PROFIT RA TE OF AROUND 9 TO 10%. HE CLAIMED THE SAME ON RETAIL BUSINESS. HE, THEREFORE, ESTIMATED THE PR OFIT @ 5% AND MADE AN ADDITION OF RS.6,50,000/-. THE ASSESSEE WENT IN APPEAL BEFORE T HE CIT(A). BEFORE THE CIT(A), THE ASSESSEE CONTENDED THAT THE CORRECT WEIGHT OF THE ORNAMENTS IN ALL THE PURCHASES IS 1291.345 KGS AND NOT 1667.230 KGS. AS ALLEGED BY THE ASSESSING OFFICER. THERE WAS SUBSTANTIAL TOTALING MISTAKE AND HE SUBMITTED THE CHART OF ALL THE PURCHASES. BY APPLYI NG A RATE OF RS.7785/- PER KG, HE WORKED OUT THE FIGURE AT RS.1,00,53,097/-. HE ALSO CONTENDED T HAT THE ASSESSEE WAS ENGAGED IN THE WHOLESALE BUSINESS AND THE MARGIN OF PROFIT IN WHOLESALE BUSI NESS DOES NOT EXCEED TO 1 TO 2% WHILE THE PARTIES AS REFERRED TO BY THE ASSESSING OFFICER WAS ENGAGED IN THE RETAIL BUSINESS AND WAS HAVING TURNOVER OVER RS.7 CRORES. HE ALSO CITED THE COMPAR ABLE INSTANCES OF M/S. SHYAM SUNDER KANHAIYA LAL HUF, PROP. G.G.S. ORNAMENTS, CHOWK BAZ AR, MATHURA WHEREIN THE G.P. RATE AT THE RATE OF 5% WAS ACCEPTED. THE CIT(A) CALLED FOR THE REMAND REPORT FROM THE ASSESSING OFFICER AND AFTER CONSIDERING THE REMAND REPORT AND SUBMISS IONS OF THE ASSESSEE, THE CIT(A) REDUCED THE ADDITION FROM 6,50,000/- TO RS.2,10,000/- BY OBSERV ING AS UNDER : I HAVE PERUSED THE ASSESSMENT RECORDS, ASSESSMENT ORDER, REMAND REPORT OF THE ASSESSING OFFICER AS WELL AS THE WRITTEN REP LIES AND THE DOCUMENTARY EVIDENCES FILED BY THE ASSESSEE. FROM THE PERUSAL O F THE ASSESSMENT ORDER, I FIND THAT THE ASSESSING OFFICER HAS ESTIMATED THE TOTAL SALES OUTSIDE THE BOOKS AT RS.1,30,00,000/- AND APPLIED A NET RATE OF 5% ON TH E BASIS OF LOOSE PARCHIES FOUND IN SURVEY WEIGHING AT 1667.230 KG WHEREAS ACCORDING TO THE ASSESSEE HIS WEIGHT WAS ONLY 1291.342 . THE COST OF THE SAME DURING THE RELEVANT TIME SHALL BE @ RS.7785/- PER KG. THE TOTAL COST OF THIS SILVER COM ES TO RS.1,00,53,097/-. AONGWITH 3 THE WRITTEN SUBMISSIONS, THE APPELLANT HAS ALSO FIL ED LIST OF LOOSE PURCHIES STATEMENT SHOWING COMPUTATION OF INCOME ON THE BASI S OF LOOSE PURCHIES FOR THE YEAR UNDER APPEAL. FROM THE PERUSAL OF VARIOUS PAPE RS AND THE DETAILED EVIDENCES, COPIES OF ACCOUNTS, SUBMITTED BY THE APP ELLANT, I AM OF THE VIEW THAT THE ASSESSING OFFICER HAS BEEN UNJUSTIFIED IN ESTIM ATING THE SALES OUT SIDE THE BOOKS AT RS.1,30,00 000/-. THE ASSESSING OFFICER HA S NOT REBUTTED IN REMAND REPORT THE WORKING OF SALES MADE BY THE APPELLANT I N HIS REPLY SENT TO THE A.O. AS SUCH, SALES HAS TO BE ESTIMATED ON THE BASIS OF PAR CHIES FOUND IN SEARCH. I, THEREFORE, MAINTAIN THE ESTIMATE OF SALES AT RS.10, 50,000/-. FURTHER, THE RATE OF PROFIT ESTIMATED BY THE ASSESSING OFFICER @ 5% ON T HE BASIS OF THE COMPARABLE BUSINESS OF M/S. DEEN DAYAL ANAND UMAR, CHAUBEJI KA PHATAK, AGRA CITED BY THE ASSESSING OFFICER, I FIND THAT THEY ARE BIGGER AND OLD BUSINESS MAN HAVING TURNOVER OF MORE THAN RS.7 CRORE WHILE THE ASSESSEE IS A VERY SMALLER IN COMPARISON TO THEM. THE BUSINESS OF BOTH THE PARTIE S CANNOT BE COMPARED WITH THE BUSINESS OF APPELLANTS CASE. HENCE, THE CHARGING O F PROFIT @ 5% SHALL BE UNJUST TO THE ASSESSEE. THE ASSESSEE DURING THE COURSE OF REMAND PROCEEDINGS HAVE CITED A COMPARABLE CASE OF M/S. SHYAM SUNDER KANAHAIYA LA L HUF, PROP. GGS ORNAMENTS, CHOWK BAZAR, MATHURA WHEREIN ON THE SALE S OF MORE THAN RS.46 CRORES THE G.P. @ 0.5% HAS BEEN ASSESSED, WHILE THE APPELLANT HAS SHOWN PROFIT @ 2%, WHICH IN VIEW, IS JUSTIFIED AND REASONABLE BE CAUSE BOTH THE PARTIES DEAL IN WHOLESALE BUSINESS. THE APPELLANT HAS ALSO FILED A COPY OF THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER, MATHURA, ON RECORD . AFTER GOING THROUGH THE COMPLETE FACTS OF THE CASE AND VERIFICATION OF THE DETAILS PLACED ON THE RECORD, I HOLD THAT THE ASSESSING OFFICER HAS BEEN UNJUSTIFIE D IN APPLYING N.P. THEREON @ 5%. I, THEREFORE, MAINTAIN APPLICATION OF NET PROFI T @ 2% WHICH COMES TO RS.2,10,000/-. THEREFORE, ADDITION OF RS.2,10,000/- IS MAINTAINED AND BALANCE ADDITION OF RS.4,40,000/- IS HEREBY DELETED. 3. THE LEARNED DR BEFORE US RELIED ON THE ORDER OF ASSESSING OFFICER WHILE THE LEARNED AR RELIED ON THE ORDER OF THE CIT(A) AND REITERATED TH E SUBMISSIONS MADE BEFORE THE CIT(A). EVEN HE HAS DRAWN OUR ATTENTION TOWARDS PAGE NO. 9-10 OF THE PAPER BOOK WHICH IS COPY OF ASSESSMENT ORDER DATED 29.03.2004 PASSED IN THE CASE OF SHYAM SUNDER KANHAIYA LAL HUF, MATHURA FOR A.Y. 2001-02. OUR ATTENTION WAS ALSO DRAWN TOWARDS THE REMAND REPORT WHICH IS AVAILABLE AT PAGE 1 TO 3 OF THE PAPER BOOK. 4. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AN D CONSIDERED THE SAME ALONGWITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE NOTED THAT THE ASSESSEE HAS DULY POINTED OUT THE MISTAKE 4 IN TOTALING OF THE WEIGHT OF THE ORNAMENTS AS RECOR DED IN VARIOUS SLIPS. THIS FACT WAS DULY SENT BY THE CIT(A) BEFORE THE ASSESSING OFFICER IN THE REMA ND PROCEEDINGS, BUT THE ASSESSING OFFICER HAS NOT CONTROVERTED THE MISTAKE AS POINTED OUT BY THE ASSESSEE. THE ASSESSING OFFICER HIMSELF HAS ESTIMATED THE AVERAGE RATE OF SILVER @ 7785/- P ER KG. IN THESE FACTS AND CIRCUMSTANCES, IN OUR OPINION, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF CIT(A) BY ESTIMATING THE SALE AT RS.10,50,000/-. TO THAT EXTENT, WE CONFIRM THE ORDE R OF THE CIT(A). 5. COMING TO THE ISSUE OF APPLICABILITY OF G.P. RAT E, WE DO NOT AGREE WITH THE LEARNED DR THAT THE COMPARATIVE INSTANCE GIVEN BY THE ASSESSIN G OFFICER IN THE CASE OF M/S. DIN DAYAL ANANAD KUMAR SHOULD HAVE BEEN FOLLOWED WHILE ESTIMA TING THE GROSS PROFIT AS THIS PARTY IS SITUATED AT AGRA WHILE THE CIT(A) HAS APPLIED THE G .P. RATE ON THE BASIS OF THE INSTANCE IN THE CASE OF M/S. SHYAM SUNDER KANAHAIYA LAL HUF, PROP. G.G.S. ORNAMENTS, CHOWK BAZAR, MATHURA. WE HAVE GONE THROUGH THE ASSESSMENT ORDER DATED 29.03.2004 IN THE CASE OF SHYAM SUNDER KANHAIYA LAL HUF AND WE NOTED THAT THIS ASSE SSEE IS ALSO HAVING A BRANCH AT AGRA AND HE HAS SHOWN THE GROSS PROFIT FROM ASSESSMENT YEAR 199 8-99 TO 2001-02 AT THE RATE 0.50%, 0.95%, 0.52% AND 0.512%. THE GROSS PROFIT SO RETURNED WAS DULY ACCEPTED BY THE ASSESSING OFFICER EVEN DURING THE ASSESSMENT YEAR 2001-02. SINCE M/S. SHYAM SUNDER KAHNAHAIYA LAL HUF IS HAVING A BRANCH AT AGRA, THEREFORE, IT CANNOT BE SA ID THAT THE GROSS PROFIT ACCEPTED BY THE REVENUE IN THE CASE OF M/S. SHYAM SUNDER KAHNAHAIYA LAL HUF IS NOT COMPARABLE AND HAS NOT TO BE TAKEN INTO ACCOUNT IN PREFERENCE WITH THE CASE OF D IN DAYAL ANAND KUMAR, AGRA. THE FACT THAT THE ASSESSEE WAS ENGAGED IN THE WHOLESALE TRADING H AS ALSO NOT BEEN CONTROVERTED BY THE REVENUE. UNDER THESE FACTS AND CIRCUMSTANCES, WE AR E OF THE VIEW THAT THE CIT(A) WAS JUST AND 5 FAIR IN ESTIMATING THE GROSS PROFIT @ 2% AND REDUCI NG THE ADDITION TO RS.2,10,000/-. WE ACCORDINGLY, CONFIRM THE ORDER OF CIT(A) ON THIS IS SUE. THUS, THE GROUND NO. 1 STANDS DISMISSED. 6. GROUND NO.2 READS AS UNDER : 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN ADOPTING THE UNDISCLOSED INVESTMENT IN SILVER AT RS.8,12,830/- O N PROFIT ON SALE OF ORNAMENTS OUT OF BOOKS AT RS.2,10,000/- AGGREGATING TO RS.10, 22,830/- WHEREAS THE ASSESSEE HIMSELF HAS SHOWN THE UNEXPLAINED INVESTMENT IN SI LVER AT RS.10,22,830/- & UNDISCLOSED PROFIT AT RS.2,00,158/- AGGREGATING TO RS.12,22,988/-. 2(II). THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN ALLOWING RELIEF OF RS.7,47,170/- BY ADOPTING THE AMOUNT OF I NVESTMENT FOR EFFECTING THE UNDISCLOSED SALE OF SILVER ORNAMENTS CONTAINING FIN E SILVER WEIGHING 1667.230 KG AT RS.8,12,830/- BY ACCEPTING COMPARABLE CASE OF MA THURA AS AGAINST RS.15,60,000/- WORKED OUT BY THE AO ON THE BASIS OF COMPARABLE CASE OF AGRA WITHOUT ASSIGNING ANY REASON TO IGNORE THE CASE OF AGRA. 7. THE BRIEF FACTS RELATING TO THIS GROUND ARE THAT THE ASSESSEE HAS ACCEPTED THE UNDISCLOSED INVESTMENT AT RS.10,22,830/- IN THE BUSINESS OF SIL VER ORNAMENTS CARRIED OUT FOR UNDISCLOSED SALES WHICH WERE FUND BY WAY OF VARIOUS SLIPS DURING THE YEAR. THE ASSESSING OFFICER WAS OF THE VIEW THAT ON THE BASIS OF THE ACCOUNT OF SHRI DIN DAYAL ANAND KUMAR, THE NORMAL RATIO OF STOCK TO SALES IN WHOLESALE SILVER ORNAMENTS BUSINESS IS AT LEAST 10 TO 12% OF THE TURNOVER. HE ACCORDINGLY TOOK THE VIEW THAT THE ASSESSEE WOULD HAVE MADE THE INVESTMENT @ 12% ON ESTIMATED SALE OF RS.1,30,00,000/- AND ACCORDINGLY, HE MADE AN ADDITI ON OF RS.15,60,000/- IN RESPECT OF UNEXPLAINED INVESTMENT. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AS WELL AS THE REMA ND REPORT, REDUCED THE ADDITION TO RS.8,12,830/- IN THE FOLLOWING MANNER : 3 . 5. I HAVE PERU SED TH E ASSES S M E NT RE CO RD S , ASSES S MENT O R DE R , REM AND R E P ORT OF T HE ASS E SSING O FF ICER A S W EL L A S T H E W R ITTEN RE PL IE S F ILED BY THE APPEL LANT V IS - A - VIS P APE RS , DETAI L S AND DOCUME NT S ANNEXED THERE WI TH . FROM TH E PE RUS AL OF THE RE C O R D S OF TH E APPELLA NT F OR T HI S YEAR AS W E L L AS EAR L I E R YEA R , I FI ND THAT THE 6 A S S ESS E E HIMSE L F H AD A D MIT T ED SA L ES OUT S I D E THE BO OK S IN THE E A R L I ER A N D TH E SAME H AS BEE N A DDED I N THE I N C OM E OF THE A P PE LLAN T ALON GWI TH PROFIT EARNED ON THAT AMOUNT DURING EACH RELEVANT YEAR. THAT AMOUNT MIGHT BE INVESTED IN STOCK OF THE APPELLANT. THUS THE ASSESSING OFFICER HAS BEEN UNJU STIFIED IN NOT ALLOWING CREDIT OF THAT AMOUNT, IN THE INVESTMENT IN STOCK. THE SAI D AMOUNT SHOULD BE DEDUCTED FROM THE, TOTAL ADDITION IN RESPECT OF INVESTMENT I N THE STOCK. FROM THE RECORDS IT IS SEEN THAT THE FOLLOWING ADDITIONS HAVE BEEN MADE FOR UNEXPLAINED SILVER AND ESTIMATE OF PROFIT ON SALE OUTSIDE THE BOOKS IN THE CASE OF THE APPELLANT INCLUDING THE PROFIT ESTIMATED UNDER REFERENCE. THE PROFIT OF THE BUSINESS ESTIMATED THIS YEAR ALSO MERGED IN ACQUIRING THE FURTHER STOCK ON THAT BASIS THE CALCULATION OF ADDITION MADE ARE AS UNDER:- ASST.YEAR INVESTMENT SURRENDERED IN THE RETURN BY THE PROFIT ESTIMATED BY ME APPELLANT 2001-02 1,50,007 = 19.169 KG. SILVER FINE RS.11,000 WHICH MERGED IN ACQUIRING SILVER OF 1.5 KG FINE 2002-03 NIL 22,000 SILVER 2.66 KG. 2003-04 2,10,000 26.97 KG SILVER FINE TOTAL ADDITION MADE RS.3,97,007 SILVER FINE 19.6 8 KG. + 1.5 KG. + 2.66 KG. +26.97 KG = 50.999 = 51 KG. THUS THE TOTAL ADDITION MADE IN THIS CASE FROM THE ASSESSMENT YEAR 2001- 02 TO 2003-04 I.E. THE YEAR UNDER REFERENCE AMOUNTS TO RS. 3,93,007/- I.E. 51 KG SILVER FINE. IN VIEW THE CLAIM OF THE APPELLANT THA T THESE ADDITIONS SHOULD BE CONSIDERED BEFORE MAKING ANY FURTHER ADDITION FOR T HE INVESTMENT IN UNDISCLOSED BUSINESS APPEARS TO BE REASONABLE. THE ASSESSING OF FICER HAS ESTIMATED THE INVESTMENT @ 12% OF THE TOTAL TURNOVER ON THE BASIS OF COMPARABLE CASE REFERRED TO HIM IN THE ASSESSMENT ORDER. THE APPELLANT HAS A LSO CITED COMPARABLE CASE OF SHYAM LAL KANAHIYA LAL, MATHURA FOR THE YEAR UNDER REFERENCE IN WHICH THE TOTAL SALES DECLARED WAS RS.8,11,56.941 AND G.P. WAS RS. 11,82,293 SHOWING A NET PROFIT @ 1.4% AND CLOSING STOCK SHOWN WAS RS.31 ,28 ,555, WHICH WAS 3.85% OF THE TOTAL TURNOVER. THE APPELLANT, THEREFORE, SUBMI TTED THAT THE ESTIMATE OF 12% BY THE ASSESSING OFFICER IN RESPECT OF INVESTMENT IS H IGHLY EXCESSIVE AND UNJUSTIFIED AND THE CASE REFERRED TO BY THE A.D. IS NOT COMPARA BLE CASE AS THAT SILVER DEALER 7 WAS ALSO MAKING SALE IN RETAIL BASIS WHILE THE APPE LLANT'S SALE IS ON WHOLESALE BASIS. THE TOTAL INVESTMENT OF 156.149 KG SILVER FI NE HAS BEEN ESTIMATED BY THE APPELLANT IN THE RATES GIVEN TO THE ASSESSING OFFIC ER ON THE BASIS OF 15 DAYS STOCK TO THE TURNOVER FROM WHICH HE HAS DEDUCTED THE SILV ER FINE CALCULATED ON THE BASIS OF ADDITION OF INVESTMENT SURRENDERED BY THE APPELL ANT AND NET PROFIT ESTIMATED FOR THE ASSESSMENT YEARS 2001-02 AND 2002-03 ONLY AND HAS WORKED OUT THE BALANCE UNEXPLAINED STOCK AT 131.978 KG FOR THE ASSESSMENT YEAR 2003-04 VALUED AT RS.10,22,830/- ON THE BASIS OF PREVALENT RATES OF SILVER. FROM THIS THE ASSESSEE HAS FURTHER CLAIMED THE COST OF SILVER TO BE ACQUIR ED FROM THE PROFIT OF RS.2,10,OOO/- ESTIMATED FOR THE YEAR UNDER REFERENC E AMOUNTS TO 26.97 KG. THE APPELLANT'S CLAIM FOR ADJUSTMENT OF PROFIT OF THE Y EAR UNDER REFERENCE APPEARS TO BE REASONABLE: IN THE WRITTEN REPLY FILED BY THE AP PELLANT BEFORE THE ASSESSING OFFICER, HE HAS ESTIMATED AN INVESTMENT OF RS.10,22 ,830/- DURING THE YEAR ON THE TOTAL TURNOVER, WHICH IS NEARLY 10% OF THE TURNOVER . HOWEVER, IN THAT INVESTMENT, THE ADDITION MADE OF RS.2,10,OOO/FOR THE YEAR UNDER REFERENCE SEPARATELY MAINTAINED FOR ESTIMATE OF PROFIT, IS TO BE DEDUCTE D AS THE SAID PROFIT MERGED IN ACQUIRING FURTHER STOCK OF ABOUT 26.97 KG SILVER FI NE IN THE BUSINESS DURING THE YEAR. LOOKING TO THE TOTALITY OF THE FACTS AND THE COMPARABLE CASE CITED BY THE APPELLANT I HOLD THAT THE ESTIMATE OF PEAK INVESTME NT MADE BY THE APPELLANT IS FAIR AND REASONABLE AND DESERVES TO BE ACCEPTED. I, THER EFORE, MAINTAIN THE ADDITION TO THE EXTENT OF RS. 10,22,830 - RS. 2,10,000 = RS.8, 12,830/- FOR UNEXPLAINED INVESTMENT IN BUSINESS OF SILVER ORNAMENTS DONE OUT SIDE THE BOOKS. THIS SHALL BE ADDED TO THE INCOME OF THE ASSESSEE. THE BALANCE AD DITION OF RS.15,60,OOO - 8,12,830 = RS. 7,47,170/- IS HEREBY DELETED. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME. WE NOTED THAT THE ASSESSEE HIMSELF HAS ACCEPTED UNEXPLAINED INVES TMENT OUTSIDE THE BOOKS SILVER BUSINESS AT RS.10,22,830/-. THEREFORE, IN OUR OPINION, THE CIT( A) WAS NOT CORRECT IN REDUCING THIS ADDITION TO RS.8,12,830/-. THE WORKING APPLIED BY ASSESSING OFF ICER, WE NOTED, IS NOT CORRECT. THE ASSESSING OFFICER HIMSELF HAS STATED THAT THE NORMA L RATIO OF STOCK TO SALES IS 10% TO 12% AND HE 8 TOOK THE RATE OF 12% ON THE ESTIMATED SALES OF RS.1 ,30,00,000/-. THE SALE HAS BEEN REDUCED BY THE CIT(A) ON THE BASIS OF THE CORRECT TOTALING OF VARI OUS PURCHASES AT RS.1,05,00,000/- THE ASSESSEE HAS ACCEPTED THE UNDISCLOSED INVESTMENT AT RS.10,22 ,830/-. THIS WILL GIVE A PERCENTAGE OF 9.74%. IF THE SALE VALUE OF RS.10,22,830/- IS WORKED OUT A FTER ADDING THE PROFIT ELEMENT, THE RATIO, IN OUR OPINION, WILL EXCEED 10% WHICH, IN OUR OPINION, IS REASONABLE KEEPING IN VIEW THE NATURE OF BUSINESS IN WHICH THE ASSESSEE IS ENGAGED. WE ACCOR DINGLY SET ASIDE THE ORDER OF CIT(A) ON THIS ISSUE AND SUSTAIN THE ADDITION TO THE EXTENT OF RS. 10,22,830/- AS HAS BEEN ACCEPTED AND DISCLOSED BY THE ASSESSEE. THIS FACT HAS ALSO NOT BEEN DENIED BY THE LEARNED AR. THUS, THIS GROUND IS PARTLY ALLOWED. 9. GROUND NO. 3 RELATES TO THE DELETION OF ADDITION OF RS.50,000/- IN RESPECT OF ADVANCE RECEIVED BY THE ASSESSEE. THE ASSESSING OFFICER NOT ED FROM THE BALANCE SHEET OF THE ASSESSEE THAT THE ASSESSEE RECEIVED ADVANCES OF RS.50,000/-. HE A CCORDINGLY ASKED THE ASSESSEE TO PROVE THESE ADVANCES. THE ASSESSEE POINTED OUT THAT THIS AMOUNT WAS RECEIVED AS UNDER : RS.1000/- CASH ON 01.05.2002 RS.49000/- TOTAL AMOUNT OF DD OF RS.48774 AND BANK COMMISSION PAID RS.226 16.05.2002 IN ABSENCE OF NAMES AND ADDRESS OF THE PERSON FROM WHOM THE AMOUNT WAS RECEIVED, THE ASSESSING OFFICER MADE THE ADDITION. THE ASSESSEE W ENT IN APPEAL BEFORE CIT(A) AND SUBMITTED AN AFFIDAVIT OF THE CREDITOR CONFIRMING THE ADVANCE PAYMENT MADE TO THE ASSESSEE AS WELL AS RECEIPT OF THE AMOUNT UNDER RULE 46A OF THE INCOME- TAX RULES. THE CIT(A) ASKED THE REMAND REPORT FROM THE ASSESSING OFFICER U/S. 250(4). AFTE R CONSIDERING THE REMAND REPORT, THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER : 5.3. I HAVE PERUSED THE ASSESSMENT RECORD, ASSESSM ENT ORDER AND THE REMAND REPORT OF THE ASSESSING OFFICER AS ALSO WRIT TEN SUBMISSIONS FILED BY THE APPELLANT ALONG WITH DETAILED EVIDENCES IN RECEIPT OF THIS CREDIT. ACCORDING TO THE APPELLANT HE RECEIVED THE SAID AMOUNT FROM RAJVIR S INGH, CHAND NAGAR COLONY, 9 HATHRAS ROAD, AGRA. THE DETAILS OF AMOUNT RECEIVED HAVE ALSO BEEN FURNISHED BY THE APPELLANT. THE APPELLANT HAS ALSO FURNISHED AN AFFIDAVIT FROM THE CREDITOR WHEREIN HE HAS CONFIRMED TO HAVE GIVEN THIS AMOUNT TO THE APPELLANT. THE CREDITOR IS AN AGRICULTURIST AND THE SAID AMOUNT WAS GIVEN O UT OF HIS AGRICULTURAL INCOME. FROM THE REMAND REPORT OF THE ASSESSING OFFICER, IT IS SEEN THAT INSPITE OF OPPORTUNITY ALLOWED TO THE A.O. TO CONTROVERT HE CO NTENTS OF THE AFFIDAVIT IN THE REMAND REPORT, THE A.O. HAS NOT CONTROVERTED ANY CL AIM MADE IN THE AFFIDAVIT BY THE CREDITORS. HENCE ALL THE CONTENTS OF THE AFFIDA VIT REMAIN UNCONTROVERTED. ALTHOUGH THIS PROOF WAS TO BE SUBMITTED BEFORE THE ASSESSING OFFICER, BUT SINCE NO OPPORTUNITY WAS ALLOWED TO THE ASSESSEE FOR DOING T HE SAME, HENCE THE APPELLANT HAS RIGHTLY FILED THIS EVIDENCE BEFORE ME AND THE S AME IS ADMITTED UNDER THE PROVISIONS OF SECTION 46A OF THE I.T. ACT IN EVIDEN CE AS THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM FURNISHING THIS EVIDENCE BEFORE THE A.O. THE ASSESSING OFFICER HAS NOT OBJECTED TO THE ADMISSION OF THE AFFIDAVIT OF THE PARTY IN EVIDENCE. 5.4. FROM THE PERUSAL OF EVIDENCES PLACED ON THE R ECORD, I HOLD THAT THE ASSESSING OFFICER HAS BEEN UNJUSTIFIED IN MAKING TH E ADDITION OF RS.50,000/- IN RESPECT OF ADVANCE RECEIVED FROM RAJ VIR SINGH. I, THEREFORE, DELETE THE ADDITION OF RS.50,000/-. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THIS IS A FACT THAT THE ASSESSEE HAS RECEIV ED THE AMOUNT FROM RAJ VIR SINGH, CHAND NAGAR, HATHRAS ROAD, AGRA. THE AFFIDAVIT OF THE CONCERNED PARTY DULY CONFIRMING THE ADVANCE PAYMENT WAS SUBMITTED. THE CIT(A) HAS GIVEN OPPORTUNITY TO THE ASSESSING OFFICER TO CONTROVERT THE AFFIDAVIT FILED BY THE ASSESSEE. THE ASSESSING OFFI CER HAS NOT BROUGHT OUT ANY MATERIAL TO THE CONTRARY. EVEN BEFORE US ALSO, NO COGENT MATERIAL O R EVIDENCE WAS BROUGHT WHICH MAY COMPEL US TO REVERSE THE ORDER OF THE CIT(A). IN OUR OPINION, THIS IS NOT A FIT CASE WHICH REQUIRES OUR INTERFERENCE. WE ACCORDINGLY CONFIRM THE ORDER OF C IT(A) ON THIS ISSUE. THUS, THIS GROUND OF REVENUE STANDS DISMISSED. ITA NO. 295/AGRA/2009 (A.Y. 2004-05): 11. BOTH THE PARTIES AGREE THAT THE ONLY ISSUE INVO LVED IN THIS APPEAL RELATE TO THE REDUCTION OF THE ADDITION MADE ON ACCOUNT OF GROSS PROFIT BY APP LYING PROFIT RATE OF 2% WHICH WAS ADOPTED BY 10 THE ASSESSING OFFICER @ 5% ON THE UNDISCLOSED SALES OF SILVER ORNAMENTS. BOTH THE LEARNED AR AND DR AGREED THAT WHATEVER VIEW THIS TRIBUNAL MAY TAKE WHILE DISPOSING OF THE GROUND NO. 1 RELATING TO ASSESSMENT YEAR 2003-04, THE SAME MAY B E TAKEN IN THIS YEAR ALSO ON THIS ISSUE, AS THE FACTS INVOLVED IN THIS CASE ARE ALSO SAME. 12. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE MATERIAL ON RECORD. WHILE DISPOSING OF THE GROUND NO. 1 RELATING TO ASS ESSMENT YEAR 2003-04, WE HAVE ALREADY SUSTAINED THE ORDER OF CIT(A) ESTIMATING THE PROFIT @ 2% ON THE UNDISCLOSED SALES INSTEAD OF 5% AS TAKEN BY THE ASSESSING OFFICER. RESPECTFULLY FOL LOWING OUR FINDING GIVEN IN GROUND NO.1 FOR THE ASSESSMENT YEAR 2003-04, WE CONFIRM THE ORDER O F CIT(A) ON THIS ISSUE IN THIS YEAR ALSO. THUS, THE ONLY GROUND RAISED BY REVENUE STANDS DISM ISSED. ITA NO. 296/AGRA/2009 (A.Y. 2005-06): 13. GROUND NO.1 RELATES TO DELETION OF ADDITION OF RS.5,90,000/- OUT OF RS.6,50,000/- MADE ON ACCOUNT OF PROFIT EARNED BY ASSESSEE ON SALE OF SIL VER ORNAMENTS OUT OF BOOKS. BOTH THE PARTIES AGREE THAT THE REDUCTION OF THE ADDITION HA S BEEN MADE ON ACCOUNT OF GROSS PROFIT BY APPLYING PROFIT RATE OF 2% WHICH WAS ADOPTED BY THE ASSESSING OFFICER @ 5% ON THE UNDISCLOSED SALES OF SILVER ORNAMENTS. BOTH THE LEARNED AR AND DR AGREED THAT WHATEVER VIEW THIS TRIBUNAL MAY TAKE WHILE DISPOSING OF THE GROUND NO. 1 RELATI NG TO ASSESSMENT YEAR 2003-04, THE SAME MAY BE TAKEN IN THIS YEAR ALSO ON THIS ISSUE, AS THE FA CTS INVOLVED IN THIS CASE ARE ALSO SAME. 14. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE MATERIAL ON RECORD. WHILE DISPOSING OF THE GROUND NO. 1 RELATING TO ASS ESSMENT YEAR 2003-04, WE HAVE ALREADY 11 SUSTAINED THE ORDER OF CIT(A) ESTIMATING THE PROFIT @ 2% ON THE UNDISCLOSED SALES INSTEAD OF 5% AS TAKEN BY THE ASSESSING OFFICER. RESPECTFULLY FOL LOWING OUR FINDING GIVEN IN GROUND NO.1 FOR THE ASSESSMENT YEAR 2003-04, WE CONFIRM THE ORDER O F CIT(A) ON THIS ISSUE IN THIS YEAR ALSO. THUS, GROUND NO. 1 RAISED BY REVENUE STANDS DISMISS ED. 15. IN GROUND NO.2, THE ISSUE INVOLVED IS RELATING TO THE DELETION OF ADDITION OF RS.14,00,000/- MADE ON ACCOUNT OF UNEXPLAINED LOANS ALLEGEDLY RECE IVED FROM 8 PERSONS AND DISALLOWANCE OF INTEREST ON SUCH LOANS. 16. THE BRIEF FACTS ARE THAT THE ASSESSEE RAISED UN SECURED LOANS TOTALING TO RS.14,00,000/- FROM 8 PERSONS AND PAID INTEREST OF RS.34,266/- ON SUCH LOANS, THE DETAILS OF WHICH ARE ENUMERATED AT PAGE 22 OF THE ASSESSMENT ORDER. THE ASSESSEE WAS REQUIRED TO FURNISH COMPLETE ADDRESSES OF THE LENDERS THEIR COPY OF ACCOUNT, DAT ES AND MODE OF RECEIPT OF LOANS, THEIR CONFIRMATIONS AND TO JUSTIFY THE LOANS IN TERMS OF IDENTIFY OF CREDITORS, THEIR CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS. HOWEVER, THE ASSESSEE COULD NOT FURNISH REQUISITE DETAILS EXCEPT THE COPIES OF ACCOUNT OF THE DEPOSITORS ALONGWITH THEIR PAN AND ADDRESSES. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE COULD NEITHER FURNISH TH E CONFIRMATIONS FROM THE CREDITORS NOR THEIR BANK STATEMENTS NOR COULD EXPLAIN THE SOURCE OF FUN DS WHICH WERE TRANSFERRED AS LOAN TO THE ASSESSEE. HE FURTHER NOTICED THAT THE ENTIRE AMOUN T TAKEN AS LOAN WAS TRANSFERRED BY THE ASSESSEE AS LOAN TO HIS COMPANY M/S. PADAMSHREE DEVELOPERS ( P) LTD. THUS, THERE WAS NO NEED OF FUNDS TO THE ASSESSEE, BUT IN FACT FUND WAS REQUIRED BY M /S. PADAMSHREE DEVELOPERS (P) LTD. AND WITH A VIEW TO GIVE COLOUR OF GENUINENESS TO THE TRANSACTI ON OF LOANS IN THE HANDS OF PADAMSHREE DEVELOPERS (P) LTD., THE ASSESSEE FIRST RAISED LOAN S IN HIS HANDS AND SUBSEQUENTLY TRANSFERRED THE 12 SAME TO HIS COMPANY. THE ASSESSING OFFICER, AFTER R ELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. DURGA PRASAD MORE, 82 ITR 540 (SC), ADDED THE ENTIRE AMOUNT OF LOANS OF RS.14,00,000/- TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED CASH CREDITS U/S. 68 AND ALSO DISALLOWED THE CLAIM OF INTEREST OF RS.34266/- PAID BY ASSESSEE ON SUCH LOANS. 17. THE LEARNED CIT(A) DELETED THE ADDITION OBSERVI NG THAT THE ASSESSEE HAD FURNISHED ALL THE PAPERS, WHICH ARE NECESSARY FOR PROVING THE GENUINE NESS OF THE LOANS AND IF THE ASSESSING OFFICER HAD ANY DOUBT ON THE DEPOSITS, HE COULD HAVE ISSUED THE SUMMONS TO THE CREDITORS WHOSE NAMES, ADDRESSES, PAN, IT RETURNS, COPIES OF ACCOUNTS WERE FILED BY ASSESSEE IN THE ASSESSMENT PROCEEDINGS. THE LEARNED CIT(A) HAS ALSO CONSIDERED THE REMAND REPORT OF AO WHILE DELETING THE ADDITION. 18. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND HAVE ALSO PERUSED THE ENTIRE MATERIAL ON RECORD. A PERUSAL OF IMPUGNED ORDER REV EALS THAT THE ASSESSEE HAD FURNISHED COMPLETE DETAILS OF LENDERS, THEIR COMPLETE NAMES AND ADDRES SES, ACKNOWLEDGEMENT FOR FILING OF RETURNS, THEIR PAN, THEIR COPIES OF BANK ACCOUNTS AND THEIR CONFIRMATIONS FOR HAVING GIVEN THE LOAN TO THE ASSESSEE. ALL THESE EVIDENCES ARE FOUND SUBMITTED I N SUPPORT OF ASSESSEES WRITTEN SUBMISSIONS DATED 15.09.2008, WHICH WERE SENT TO THE ASSESSING OFFICER FOR HIS COMMENTS. HOWEVER, THE ASSESSING OFFICER HAS GIVEN NO COMMENTS ON THE AFOR ESAID EVIDENCES OBSERVING IN THE REMAND REPORT THAT NO FRESH MATERIAL/EVIDENCE HAS BEEN FUR NISHED BY THE ASSESSEE, AS THE EVIDENCES ENCLOSED ARE THE SAME WHICH WERE FURNISHED AND CONS IDERED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE AO, THEREFORE, HAS NOT OFFERED ANY COMMENT NOR DID HE OBJECT TO THE ADMISSION OF THOSE EVIDENCES SUBMITTED BY ASSESSEE WITH HIS W RITTEN SUBMISSIONS. THE DOCUMENTARY 13 EVIDENCES FURNISHED BY ASSESSEE, IN OUR OPINION, GO TO SUBSTANTIATE THE IDENTITY OF DEPOSITORS, THEIR CREDITWORTHINESS AND GENUINENESS OF TRANSACTI ONS. THE CONFIRMATIONS, IT RETURNS, COPIES OF BANK ACCOUNTS ETC., IN OUR OPINION, GO TO EXPLAIN T HE NATURE AND SOURCE OF CREDITS. THE ASSESSING OFFICER WHILE MAKING ADDITION U/S. 68 DID NOT DISCH ARGE THE ONUS THAT LAY UPON HIM. HE DID NOT BOTHER TO ISSUE SUMMONS TO ANY OF THE DEPOSITORS EV EN ON THE REQUEST OF ASSESSEE BEFORE DOUBTING THE CREDITS. THE DECISION IN THE CASE OF CIT VS. DU RGA PRASAD MORE (SUPRA) IS FOUND TO HAVE BEEN RENDERED BY HONBLE SUPREME COURT ON DIFFERENT FACT S AND HAS RIGHTLY BEEN DISTINGUISHED BY THE LD. CIT(A). WE FIND NO MATERIAL ON RECORD TO DISREG ARD THE DECISION REACHED BY THE LD. CIT(A). THEREFORE, THE ORDER OF LD. CIT(A) DESERVES TO BE C ONFIRMED ON THIS COUNT. AS A RESULT, GROUND NO. 2 OF REVENUE IS DISMISSED. ITA NO. 297/AGRA/2009 (A.Y. 2006-07): 19. GROUND NO.1 RELATES TO DELETION OF ADDITION OF RS.6,49,000/- OUT OF RS.6,50,000/- MADE ON ACCOUNT OF PROFIT EARNED BY ASSESSEE ON SALE OF SIL VER ORNAMENTS OUT OF BOOKS. BOTH THE PARTIES AGREE THAT THE REDUCTION OF THE ADDITION HA S BEEN MADE ON ACCOUNT OF GROSS PROFIT BY APPLYING PROFIT RATE OF 2% WHICH WAS ADOPTED BY THE ASSESSING OFFICER @ 5% ON THE UNDISCLOSED SALES OF SILVER ORNAMENTS. BOTH THE LEARNED AR AND DR AGREED THAT WHATEVER VIEW THIS TRIBUNAL MAY TAKE WHILE DISPOSING OF THE GROUND NO. 1 RELATI NG TO ASSESSMENT YEAR 2003-04, THE SAME MAY BE TAKEN IN THIS YEAR ALSO ON THIS ISSUE, AS THE FA CTS INVOLVED IN THIS CASE ARE ALSO SAME. 20. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE MATERIAL ON RECORD. WHILE DISPOSING OF THE GROUND NO. 1 RELATING TO ASS ESSMENT YEAR 2003-04, WE HAVE ALREADY SUSTAINED THE ORDER OF CIT(A) ESTIMATING THE PROFIT @ 2% ON THE UNDISCLOSED SALES INSTEAD OF 5% 14 AS TAKEN BY THE ASSESSING OFFICER. RESPECTFULLY FOL LOWING OUR FINDING GIVEN IN GROUND NO.1 FOR THE ASSESSMENT YEAR 2003-04, WE CONFIRM THE ORDER O F CIT(A) ON THIS ISSUE IN THIS YEAR ALSO. THUS, GROUND NO. 1 RAISED BY REVENUE STANDS DISMISS ED. 21. SECOND GROUND DOES NOT ARISE OUT OF THE ORDER O F THE CIT(A) AND THE ASSESSING OFFICER. WE DO NOT FIND ANY RELIEF BEING GRANTED BY THE CIT( A) AS MENTIONED IN THIS GROUND DURING THE YEAR UNDER CONSIDERATION. THUS, THIS GROUND IS DISM ISSED AS INFRUCTUOUS. 22. GROUND NO. 3 RELATES TO DELETION OF ADDITION OF RS.71,00,000/- BEING UNEXPLAINED LOANS AND ADVANCES ALLEGEDLY RECEIVED FROM VARIOUS PERSON S AND DISALLOWANCE OF INTEREST OF RS.2,59,345/- ON SUCH LOANS/ADVANCES. THE BRIEF FAC TS ARE THAT THE ASSESSEE RAISED UNSECURED LOANS / ADVANCES TOTALING TO RS.71,00,000/- FROM VARIOUS PERSONS AND PAID INTEREST OF RS.2,59,345/- ON SUCH LOANS, THE DETAILS OF WHICH ARE ENUMERATED IN THE ORDERS OF BOTH THE AUTHORITIES BELOW AS UNDER : DETAILS OF LOANS TAKEN BY ASSESSEE : SL. NO. NAME OF DEPOSITORS AMOUNT OF DEPOSIT INTERE ST CLAIMED 1. BABU LAL MITTAL & COMPANY 3,50,000 26,250 2. BASANT TRUST 4,00,000 30,000 3. RAMA RANI TRUST 2,50,000 18,750 4. UMESH AGARWAL 2,50,000 13,233 TOTAL 12,50,000 DETAILS OF ADVANCES RECEIVED BY ASSESSEE : SL. NO. NAME OF DEPOSITORS AMOUNT OF DEPOSIT 1. ARCHANA GOYAL 24,00,000/- 2. DEVENDRA SINGH 2,00,000/- 3. RAJNI GOYAL 24,00,000/- 4. RAJVEER SINGH YADAV 50,000/- 5. SATYA AGENCIES 8,00,000/- TOTAL 58,50,000/- 15 23. THE ASSESSEE WAS REQUIRED TO FURNISH COMPLETE A DDRESSES OF THE LENDERS THEIR COPY OF ACCOUNT, DATES AND MODE OF RECEIPT OF LOANS, THEIR CONFIRMATIONS AND TO JUSTIFY THE LOANS IN TERMS OF IDENTIFY OF CREDITORS, THEIR CREDITWORTHINESS AN D GENUINENESS OF TRANSACTIONS. HOWEVER, THE ASSESSEE COULD NOT FURNISH REQUISITE DETAILS EXCEPT THE COPIES OF ACCOUNT OF THE DEPOSITORS ALONGWITH THEIR PAN AND ADDRESSES. THE ASSESSING OF FICER OBSERVED THAT THE ASSESSEE COULD NEITHER FURNISH THE CONFIRMATIONS FROM THE CREDITOR S NOR THEIR BANK STATEMENTS NOR COULD EXPLAIN THE SOURCE OF FUNDS WHICH WERE TRANSFERRED AS LOAN TO THE ASSESSEE. HE FURTHER NOTICED THAT THE ENTIRE AMOUNT TAKEN AS LOAN WAS TRANSFERRED BY THE ASSESSEE AS LOAN TO HIS COMPANY M/S. PADAMSHREE DEVELOPERS (P) LTD. THUS, THERE WAS NO N EED OF FUNDS TO THE ASSESSEE, BUT IN FACT FUND WAS REQUIRED BY M/S. PADAMSHREE DEVELOPERS (P) LTD. AND WITH A VIEW TO GIVE COLOUR OF GENUINENESS TO THE TRANSACTION OF LOANS IN THE HAND S OF PADAMSHREE DEVELOPERS (P) LTD., THE ASSESSEE FIRST RAISED LOANS IN HIS HANDS AND SUBSEQ UENTLY TRANSFERRED THE SAME TO HIS COMPANY. THE ASSESSING OFFICER, AFTER RELYING ON THE DECISIO N OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. DURGA PRASAD MORE, 82 ITR 540 (SC), ADDED T HE ENTIRE AMOUNT OF LOANS /ADVANCES OF RS.71,00,000/- TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED CASH CREDITS U/S. 68 AND ALSO DISALLOWED THE CLAIM OF INTEREST OF RS.2,59,345/- P AID BY ASSESSEE ON SUCH LOANS. 24. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A) ALSO, THE ASSESSEE FILED ALL THE DETAILS AND POINTED OUT THAT THE ASSESSEE H AS TAKEN LOANS OF RS.12,50,000/- AND ADVANCES OF RS.58,50,000/- WERE RECEIVED AGAINST SALE OF LAND. THE ASSESSEE HAS FURNISHED THE DETAILS OF THE DEPOSITORS GIVING THEIR COMPLETE ADDRESSES AND PERM ANENT ACCOUNT NUMBERS ALONGWITH CONFIRMATIONS, PROOF OF FILING OF THE RETURN IN THE SHAPE OF ACKNOWLEDGEMENT, COPY OF BANK ACCOUNTS AND OTHER EVIDENCES IN RESPECT OF IDENTITY AND CREDITWORTHINESS OF THE DEPOSITORS. WITH 16 REGARD TO ADVANCES OF RS.24 LAKHS EACH RECEIVED FRO M ARCHANA GOYAL AND RAJNI GOYAL, THE ASSESSEE HAS ALREADY EXECUTED REGISTERED SALE DEEDS IN THEIR FAVOUR AND THE AMOUNT OF ADVANCE STOOD ADJUSTED. COPY OF SALE DEED WAS ALSO FILED. T HE AMOUNT OF RS.50,000/- IN THE NAME OF RAJVIR YADAV WAS TOLD TO BE A OLD BALANCE, WHICH WA S ALREADY CONSIDERED IN A.Y. 2002-03. CONFIRMATORY LETTER OF SRI DEVENDRA WHO GAVE THE AM OUNT OF RS.200000/- AS ADVANCE FOR PURCHASE OF LAND WAS ALSO FILED BEFORE THE ASSESSIN G OFFICER. THE ADDITION WAS MADE BY THE ASSESSING OFFICER IN A SUMMARY MANNER WITHOUT APPRE CIATING THE DOCUMENTS AND EVIDENCE FILED BY THE ASSESSEE. RELIANCE WAS PLACED ON THE FOLLOWI NG DECISIONS : (I). CIT VS. ORISSA CORPORATION PRIVATE LTD., 159 I TR 78 (SC) (II). DEPUTY CIT VS. ROHINI BUILDERS 256 ITR 360 (G UJ). (III). ORIENT TRADING CO. LTD. VS. CIT (1963) 49 IT R 723 (IV). NEMI CHAND KOTHARI VS. CIT, 264 ITR 254 (GAUH ATI) (V). KHANDELWAL CONSTRUCTIONS VS. CIT, 227 ITR 900 (GAU.). 25. THE LEARNED CIT(A) CALLED FOR THE REMAND REPORT OF THE ASSESSING OFFICER, WHICH WAS SUBMITTED BY THE ASSESSING OFFICER. AFTER CONSIDERI NG THE REMAND REPORT OF THE ASSESSING OFFICER AS WELL AS THE REPLY OF THE ASSESSEE ON THE REMAND REPORT, THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER : 3.5. FROM THE PERUSAL OF THE ASSESSMENT ORDER I F IND THAT THE ASSESSING OFFICER HAS CITED A CASE OF HON'BLE SUPREME COURT P ASSED IN THE CASE OF ELT VS. DURGA PRASAD MORE REPORTED IN 82 ITR 540. THIS HAS WRONGLY BEEN QUOTED BY THE ASSESSING OFFICER. IT WAS NOT THE CAS E OF CASH CREDIT, BUT IT WAS THE CASE OF PURCHASE OF PROPERTY BY THE ASSESSEE, W HICH WAS ASSESSED IN HIS HANDS FOR SEVERAL YEARS THEREAFTER IT WAS CLAIMED A FTER 17 YEARS THAT IT BELONG TO TRUST ON THE BASIS OF RECITAL IN THE DEED . THERE WAS NO OTHER MATERIAL INCLUDING THE SOURCES OF INVESTMENT TO PRO VE THE SAID CLAIM. THE HON'BLE INCOME-TAX APPELLANT TRIBUNAL HELD IN THIS CASE THAT THE PROPERTY BELONGED TO THE ASSESSEE IS APPARENT AND IS TO BE T REATED AS REAL. IT IS THE ASSESSEE TO PROVE HIS CLAIM WHICH HE WAS UNABLE TO PROVE. HENCE, COURT COULD INTO CONSIDERATION THE SURROUNDING CIRCUMSTAN CES TO FIND OUT THE REALITY OF TRANSACTION. HENCE, DECISION QUOTED BY T HE ASSESSING OFFICER HAS NO RELEVANCE IN THIS CASE. 17 3.6. I ALSO FIND THAT THE APPELLANT HAS FURNISHED ALL THE PAPERS FOR PROVING THE IDENTITY, CREDITWORTHINESS AND GENUINEN ESS OF THE LOANS INCLUDING THE SOURCE OF THE SOURCE. DURING THE COURSE OF APPE AL PROCEEDINGS, THE APPELLANT ALSO DRAWN MY ATTENTIONS TO THE DECISIONS IN THE CASES OF DY. CIT VS. ROHINI BUILDERS - 256 ITR 360 (GUJ), ORIENT TRA DING CO. LTD. VS. CIT (1963) 49 ITR 723, ORISSA CORPORATION (1986) 159 IT R 78 (SUPREME COURT), SAROGI CREDIT CORPN VS. CLT (1975) CTR (PAT) I, (19 76) 103 ITR 344 (PATNA), NEMI CHAND KOTHARI VS. CLT - 264 ITR 254 (GAUHATI), KHANDELWAL CONSTRUCTIONS VS. CIT (1997) 227 ITR 900-904 (GAUHA TL) WHICH I FOUND APPLICABLE TO THE FACTS OF THE CASE. IF THE ASSESSI NG OFFICER HAD ANY DOUBT ABOUT THE GENUINENESS AND CREDITWORTHINESS. HE HAD AMPLE POWER TO SUMMON AND EXAMINE EACH AND EVERY LENDER TO FIND OUT THE T RUTH AND TO DISPROVE THE APPELLANT'S CLAIM, WHICH HAS NOT BEEN DONE BY THE A .O THEN WHAT MORE EVIDENCE IN THIS REGARD SHOULD BE PLACED ON RECORD BY AN APPELLANT FOR PROVING THE GENUINENESS OF THE LOANS, HAS NOT BEEN POINTED OUT BY THE A.O. NOR ANY THING ADVERSE HAS BEEN FOUND IN THE SUBMISSIONS OF THE APPELLANT. 3.7 AFTER CONSIDERING ALT THE EVIDENCES, MATERIAL P LACED ON RECORD, I HOLD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAK ING THE ADDITION OF RS.71,00,000/- IN RESPECT OF LOAN CREDITORS AND IN TEREST OF RS. 2,59,345/- TOTALING TO RS, 73,59,345/-. THEREFORE, THE ENTIRE ADDITION OF RS.73,59,345/- (RS.71,00,000 LOAN CREDITS AND RS.2,59,345/- INTERE ST THEREON) IS HEREBY DELETED . 26. THE LEARNED DR BEFORE US VEHEMENTLY CONTENDED T HAT THE ASSESSEE COULD NOT PROVE THE CREDITWORTHINESS OF THE PARTIES FROM WHOM THE MONEY HAS BEEN RECEIVED BY HIM AS ALSO THE GENUINENESS OF TRANSACTIONS. RELIANCE WAS PLACED O N THE DECISION OF SUMATI DAYAL VS. CIT, 214 ITR 801 (SC), CIT VS. DIVINE LEASING & FINANCE LTD. AND OTHERS, 299 ITR 268 (DEL.) AND CIT VS. P. MOHANKALA 291 ITR 278 (SC). 27. THE LEARNED AR, ON THE OTHER HAND, VEHEMENTLY C ONTENDED THAT THE ASSESSEE HAS SUBMITTED EVIDENCE IN RESPECT OF EACH OF THE CREDITOR GIVING HIS NAME, COMPLETE ADDRESS, PERMANENT ACCOUNT NUMBER, CONFIRMATIONS, PROOF OF FILING OF I NCOME-TAX RETURN IN THE SHAPE OF ACKNOWLEDGEMENT, COPY OF BANK ACCOUNT AND OTHER EVI DENCES TO PROVE THE IDENTITY AND 18 CREDITWORTHINESS OF CREDITORS AND GENUINENESS OF TH E TRANSACTIONS. THE ASSESSEE HAS, THUS, DULY DISCHARGED HIS ONUS. THE ASSESSEE HAD REQUESTED THE ASSESSING OFFICER THAT IN CASE HE IS NOT SATISFIED, HE MAY SUMMON THE PARTIES U/S. 131. RELI ANCE WAS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. ORISSA CORPORA TION PVT. LIMITED, 159 ITR 78 (SC). IT WAS ALSO POINTED OUT THAT THE ASSESSEE IS NOT SUPPOSED TO PROVE THE SOURCE OF SOURCES. IN THIS REGARD RELIANCE WAS PLACED ON THE DECISION OF DCIT VS. ROH INI BUILDERS, 256 ITR 360 (GUJ). RELIANCE WAS ALSO PLACED ON THE DECISION OF HONBLE ALLAHABA D HIGH COURT IN THE CASE OF CIT VS. JOHRI MAL GOYAL, 147 TAXMAN 448 (ALL.) AND IT WAS VEHEMEN TLY CONTENDED THAT THE CASE OF THE ASSESSEE IS DULY COVERED BY THE DECISION OF JURISDICTIONAL H IGH COURT. IN THIS CASE, THE JURISDICTIONAL HIGH COURT HAS HELD THAT WHEN THE AMOUNT IS FOUND DEPOSI TED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE ONLY THEN SECTION 68 APPLIES AND NOT WHEN THE AMOUN T IS FOUND DEPOSITED IN THE BOOKS OF THIRD PARTY. THE ASSESSEE CANNOT BE ASKED TO PROVE THE SO URCE OF SOURCES OR THE ORIGIN OF THE DEPOSITS. REFERRING TO THE DECISIONS RELIED BY THE LEARNED DR , IT WAS POINTED OUT THAT THE DECISION IN THE CASE OF SAMATI DAYAL (SUPRA) IS NOT APPLICABLE TO T HE FATS OF THE CASE AS IT DOES NOT RELATE TO THE ADDITION MADE U/S. 68, BUT IT RELATES TO THE INCOME SHOWN BY THE ASSESSEE. RELATING TO THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS. DIVINE L EASING AND FINANCE LTD.(SUPRA), IT WAS POINTED OUT THAT THIS DECISION RELATES TO THE APPLI CABILITY OF SECTION 68 IN CASE OF SHARE CAPITAL RECEIVED BY THE COMPANY. IN THIS CASE, THE HONBLE HIGH COURT HAS LAID DOWN THAT NO ADVERSE INFERENCE IS TO BE DRAWN IF THE SHARE HOLDER FAILED TO RESPOND THE NOTICE ISSUED BY THE ASSESSING OFFICER. IT IS THE DUTY OF THE ASSESSING OFFICER TO INVESTIGATE THE CREDITWORTHINESS OF THE SHARE HOLDER. THUS, IT WAS CONTENDED THAT THIS DECISION, IN FACT, SUPPORTS THE CASE OF THE ASSESSEE. REFERRING TO THE DECISION IN THE CASE OF CIT VS. P. MOHANKALA (SUPRA), IT WAS POINTED OUT THAT THE HONBLE SUPREME COURT IN THAT CASE CLEARLY LAID DOW N THAT ON THE EXPLANATION OF THE ASSESSEE THE 19 ASSESSING OFFICER SHOULD FORM THE OPINION OBJECTIVE LY ON PROPER APPRECIATION OF THE MATERIAL. EVEN IF THE EXPLANATION OF THE ASSESSEE IS NOT SATI SFACTORY, THE MATERIAL CANNOT LEAD TO CONCLUSION THAT THE RECEIPT IS OF THE INCOME NATURE. THE BURDE N IS ON THE ASSESSEE TO PROVE THE CASH CREDIT. THE ASSESSEE HAS DULY DISCHARGED HIS BURDEN BY ADDU CING ALL THE EVIDENCES. OUR ATTENTION WAS DRAWN TO THE PAPER BOOK AND IT WAS POINTED OUT THAT THE ASSESSEE HAS SPECIFICALLY ASKED THE ASSESSING OFFICER THAT IN CASE THE ASSESSING OFFICE R HAS ANY DOUBT, HE MAY SUMMON THE DEPOSITORS U/S. 131 OF THE INCOME-TAX ACT. IN CASE, THE ASSESSING OFFICER FAILED TO SUMMON THE CREDITORS, THE ADDITION CANNOT BE MADE IN THE HANDS OF THE ASSESSEE. THE CIT(A) GAS DULY ASKED FOR THE REMAND REPORT FROM THE ASSESSING OFFICER AN D IN THE REMAND REPORT, THE ASSESSING OFFICER HAS ACCEPTED THAT ALL THESE EVIDENCES WERE FILED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND NO FRESH MATERIAL OR EVIDENCE IS FI LED. RELIANCE WAS ALSO PLACED ON THE FOLLOWING DECISIONS : I) KALYAN MEMORIAL & CHARITABLE TRUST VS. ACIT 124 TTJ 883 II) CIT VS. DAYA CHAND JAIN VAIDYA (1975) 98 ITR 280 (A LL.) III) DCIT VS. ROHINI BULDERS 256 ITR 360 (GUJ.) IV) NEMI CHAND KOTHARI VS. CIT, 264 ITR 254 V) CIT VS. DAULAT RAM RAWATMULL, 87 ITR 349 (SC) VI) CIT VS. REAL TIME MARKETING P. LTD., 306 ITR 35 (DE L.) VII) CIT VS. LAUL TRANSPORT CORPORATION, 180 TAXMAN 185 (P&H) VIII) CIT VS. JOHRI MAL GOYAL, 147 TAXMAN 448 (ALL.) IX) CIT VS. ASHOK KUMAR KAKKAR HUF 171 TAXMAN 354 (DEL. ) X) NATHU RAM PREM CHAND VS. CIT, 49 ITR 561 (DEL.). 28. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE MATERIAL ON RECORD ALONGWITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH VARIOUS CASE LAWS CITED BEFORE US FROM BOTH THE SIDES. THIS IS THE FA CT ON RECORD THAT THE ASSESSEE HAS SUBMITTED THE NAMES, ADDRESSES, PERMANENT ACCOUNT NUMBERS, CONFIR MATIONS, PROOF FOR FILING OF RETURN 20 ALONGWITH COPY OF BANK ACCOUNTS OF VARIOUS PARTIES FROM WHOM THE LOAN HAS BEEN RECEIVED BY THE ASSESSEE DURING THE YEAR. WHEN THE ASSESSING OFFIC ER ASKED THE ASSESSEE TO PROVE THE CASH CREDIT, THE ASSESSEE HAS SUBMITTED ALL THESE EVIDEN CES. EVEN THE ASSESSING OFFICER HAS SPECIFICALLY REQUESTED THE ASSESSEE TO ISSUE SUMMON U/S. 131 IN CASE THE ASSESSEE IS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. THE EXPLANATION OF THE ASSESSEE THAT ADVANCES WERE RECEIVED AS ADVANCES AGAINST SALE OF LAND STANDS CORROBORATED W ITH THE FACT THAT SOME OF THE ADVANCES HAVE BEEN ADJUSTED AGAINST THE SALE PROCEEDS OF LAND, AS NARRATED IN THE IMPUGNED ORDER. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLAN ATION OF THE ASSESSEE, WHO MADE THE ADDITION MERELY ON THE BASIS THAT THE ASSESSEE COULD NOT PRO VE THE SOURCE OF THE DEPOSITORS. NOW, THE QUESTION ARISES WHETHER UNDER THE FACTS AND CIRCUMS TANCES OF THIS CASE, THE ADDITION CAN BE SUSTAINED IN THE CASE OF THE ASSESSEE MERELY ON THE BASIS THAT THE ASSESSEE COULD NOT PROVE THE SOURCE OF SOURCES. IN ORDER TO APPRECIATE THE CONTR OVERSY, IT WOULD BE APPROPRIATE TO REPRODUCE THE PROVISIONS OF SECTION 68 OF THE ACT HEREIN BELO W: 68. CASH CREDITS WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATI ON ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, I N THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE C HARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. 29. BEFORE CHARGING THE CREDIT AS THE INCOME OF THE ASSESSEE, THE AO HAS TO FORM AN OPINION. THIS OPINION IS SUBJECTIVE, BUT IT HAS TO BE JUDICI OUS AND BASED ON MATERIAL ON RECORD. AN OPINION IS AN INFERENCE OF FACTS FROM OBSERVED FACTS. IT I S NOT AN IMPRESSION. IT IS A CONVICTION BASED ON APPRAISAL OF EVIDENCE ON RECORD. IN V.L.S. FINANCE LTD. V CIT (2000) 246 ITR 707, THE HONBLE DELHI HIGH COURT OBSERVED AS UNDER: 21 OPINION MEANS SOMETHING MORE THAN MORE RETAILIN G OF GOSSIP OR HEARSAY; IT MEANS JUDGMENT OR BELIEF, THAT IS, A BELIEF OR A CO NVICTION RESULTING FROM WHAT ONE THINKS ON A PARTICULAR QUESTION. IT MEANS: JUDGMENT OR BELIEF BASED ON GROUNDS SHORT OF PROOF. IF A MAN IS TO FORM AN OPINION AND HIS OPINION IS TO GOVERN, HE MUST FORM IT HIMSELF ON SUCH REASONS AND GROUNDS AS SEEM GOOD TO HIM. THUS, BEFORE THE AO FORMS AN OPINION, HE MUST CONSI DER THE MATERIAL BEFORE HIM. HE HAS BEFORE HIM THE MATERIAL SUBMITTED BY THE ASSESSEE WHILE GI VING AN EXPLANATION, THEN HE MUST COLLECT HIS OWN MATERIAL AS AN ENQUIRY OFFICER, WEIGH THE TWO M ATERIALS AND AS A QUASI-JUDICIAL AUTHORITY FORM AN OPINION AS TO WHETHER EXPLANATION FURNISHED BY THE ASSESSEE IS SATISFACTORY OR NOT. IF THE AO DOES NOT APPLY HIS MIND IN EXAMINING THE DOCUMEN TS FURNISHED BY THE ASSESSEE AND DOES NOT FIND ANY SUBSTANTIVE ERROR IN THEM NOR HE COLLECTS ANY MATERIAL BY EXERCISING POWERS UNDER INCOME-TAX ACT, THEN THE CLAIM OF THE ASSESSEE CAN NOT BE STRAIGHTWAY REJECTED. IF HE DOES, IT WOULD BE A VIOLATION OF PRINCIPLES OF NATURAL JUSTI CE AND PROVISIONS OF SECTION 68. 30. THE EXPRESSION THE ASSESSEE OFFERS NO EXPLANAT ION MEANS WHERE THE ASSESSEE OFFERS NO PROPER, REASONABLE AND ACCEPTABLE EXPLANATION AS RE GARDS THE SUM FOUND CREDITED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. THE OPINION OF THE AO FOR NOT ACCEPTING THE EXPLANATION OFFERED BY THE ASSESSEE AS NOT SATISFACTORY MUST BE BASED ON PROPER APPRECIATION OF THE MATERIAL AND OTHER SURROUNDING CIRCUMSTANCES AVAILABLE ON RE CORD. THE OPINION OF THE AO IS TO BE BASED ON APPRECIATION OF THE MATERIAL ON RECORD. 31. THE WORD MAY USED IN SECTION 68 PROVIDES DISC RETION TO THE AO. IN GENERAL THE WORD MAY IS AN AUXILIARY VERB CLARIFYING THE MEANING O F ANOTHER VERB OF EXPRESSING AN ABILITY, CONTINGENCY, POSSIBILITY OR PROBABILITY. WHEN USED IN A STATUTE IN ITS ORDINARY SENSE THE WORD IS PERMISSIVE AND NOT MANDATORY. BUT WHERE CERTAIN CON DITIONS ARE PROVIDED IN THE STATUTE AND ON THE FULFILLMENT THEREOF A DUTY IS CAST ON THE AUTHO RITY CONCERNED TO TAKE AN ACTION, THEN ON 22 FULFILLMENT OF THOSE CONDITIONS THE WORD MAY TAKE THE CHARACTER OF SHALL AND THEN IT BECOMES MANDATORY. IN SECTION 68, WE FIND THAT THERE ARE N O SUCH CONDITIONS ON THE FULFILLMENT OF WHICH THE AO IS DUTY BOUND TO MAKE THE ADDITION. THE WORD MAY DENOTES THE DISCRETION OF THE AO THAT HE CAN MAKE AN ADDITION OR CANNOT MAKE AN ADDI TION. THE HON'BLE SUPREME COURT IN THE CASE OF CIT V SMT. P K NOORJAHAN 237 ITR 570 (SC) WHILE DEALING WITH THE WORD MAY IN SECTION 69 OBSERVED, AS UNDER: 'IN THE CORRESPONDING CLAUSE OF THE BILL WHICH WAS INTRODUCED IN PARLIAMENT, WHILE INSERTING SECTION 69 IN THE INCOME-TAX ACT, 1 961, THE WORD 'SHALL' HAD BEEN USED BUT DURING THE COURSE OF CONSIDERATION OF THE BILL AND ON THE RECOMMENDATION OF THE SELECT COMMITTEE, THE SAID WO RD WAS SUBSTITUTED BY THE WORD 'MAY'. THIS CLEARLY INDICATES THAT THE INTENTI ON OF PARLIAMENT IN ENACTING SECTION 69 WAS TO CONFER A DISCRETION ON THE INCOME -TAX OFFICER IN THE MATTER OF TREATING THE SOURCE OF INVESTMENT WHICH HAS NOT BEE N SATISFACTORILY EXPLAINED BY THE ASSESSEE AS THE INCOME OF THE ASSESSEE AND THE INCOME-TAX OFFICER IS NOT OBLIGED TO TREAT SUCH SOURCE OF INVESTMENT AS INCOM E IN EVERY CASE WHERE THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE NOT SATISFACTORY. THE QUESTION WHETHER THE SOURCE OF THE INVESTMENT SHOULD BE TREA TED AS INCOME OR NOT UNDER SECTION 69 HAS TO BE CONSIDERED IN THE LIGHT OF THE FACTS OF EACH CASE. IN OTHER WORDS, A DISCRETION HAS BEEN CONFERRED ON THE INCOM E-TAX OFFICER UNDER SECTION 69 OF THE ACT TO TREAT THE SOURCE OF INVESTMENT AS THE INCOME OF THE ASSESSEE IF THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT FOUND SA TISFACTORY AND THE SAID DISCRETION HAS TO BE EXERCISED KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PARTICULAR CASE.' 32. IN THE INSTANT CASE, WE NOTED THAT THE ASSESSEE HAS SUBMITTED THE NAMES, ADDRESSES, CONFIRMATIONS, PERMANENT ACCOUNT NUMBERS AND PROOF OF FILING THE RETURN BY EACH OF THE CREDITORS AS WELL AS XEROX COPY OF THE BANK ACCOUNT OF THE LENDERS. THE ASSESSING OFFICER NOTED THAT IN MOST OF THE CASES, THE LENDER HAS DEPOSITED THE CASH IN THEIR RESPECTIVE ACCOUNTS BEFORE ADVANCING MONEY TO THE ASSESSEE AND ON THAT BASIS, HE TOOK THE VIEW THAT THE ASSESSEE COULD NOT PROVE THE CASH CREDITS AND FOR THAT THE RELIANCE WA S PLACED BY THE LD. DR MAINLY ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SUMATI DAYA L VS. CIT (SUPRA). WE HAVE GONE THROUGH 23 THIS DECISION AND WE NOTED THAT IN THIS CASE, THE H ONBLE SUPREME COURT HAS HELD THAT IN VIEW OF SECTION 68 OF THE INCOME-TAX ACT, 1961, WHERE ANY S UM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVIOUS YEAR IT MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR IF THE EXPLANATION OFFERED BY TH E ASSESSEE ABOUT THE NATURE AND SOURCE THEREOF IS, IN THE OPINION OF THE ASSESSING OFFICER, NOT SA TISFACTORY. IN SUCH A CASE THERE IS, PRIMA FACIE, EVIDENCE AGAINST THE ASSESSEE, VIZ., THE RECEIPT OF MONEY, AND IF HE FAILS TO REBUT THE SAID EVIDENCE, IT CAN BE USED AGAINST HIM BY HOLDING THA T IT WAS A RECEIPT OF AN INCOME NATURE. WHILE CONSIDERING THE EXPLANATION OF THE ASSESSEE, THE DE PARTMENT CANNOT, HOWEVER, ACT UNREASONABLY. IN THIS CASE, DURING THE ASSESSMENT YEAR 1971-72, T HE ASSESSEE CLAIMED THAT SHE RECEIVED A TOTAL AMOUNT OF RS.3,11,831/- BY WAY OF RACE WINNINGS IN JACKPOTS AND TREBLE EVENTS IN RACES AT TURF CLUBS IN BANGALORE, MADRAS AND HYDERABAD. THE SAID AMOUNT WAS SHOWN BY THE ASSESSEE IN THE CAPITAL ACCOUNT IN HER BOOKS. FOR THE ASSESSMENT YE AR 1972-73, SHE CLAIMED RECEIPTS OF RS.93500/- AS RACE WINNINGS IN TWO JACKPOTS AT BANG ALORE AND MADRAS AND THE SAID AMOUNT WAS CREDITED IN THE CAPITAL ACCOUNT IN THE BOOKS. THE A SSESSING OFFICER INCLUDED THESE AMOUNTS AS INCOME FROM OTHER SOURCES AND ASSESSED THEM. THE AA C CONFIRMED THE ADDITION. THE MATTER WENT TO SETTLEMENT COMMISSION WHO BY A MAJORITY HEL D THAT THE EXPLANATION OF THE ASSESSEE WAS NOT GENUINE DUE TO THE REASONS (I) THAT THE ASSESSE ES KNOWLEDGE OF RACING WAS VERY MEAGER, (II) THAT A JACKPOT IS A STAKE OF FIVE EVENTS IN A SINGL E DAY AND ONE CAN BELIEVE A REGULAR AND EXPERIENCED PUNTER CLEARING A JACKPOT OCCASIONALLY BUT THE CLAIM OF THE ASSESSEE OF HAVING WON A NUMBER OF JACKPOTS IN THREE OR FOUR SEASONS NOT MER ELY AT ONE PLACE BUT AT THREE DIFFERENT CENTRES, NAMELY MADRAS, BANGALORE AND HYDERABAD APPEARED, PR IM FACIE, TO BE WILD AND CONTRARY TO STATISTICAL THEORIES AND EXPERIENCE OF FREQUENCIES AND PROBABILITIES, (III) THE ASSESSEES BOOKS DID NOT SHOW ANY DRAWINGS ON RACE DAYS OR ON THE IMMEDI ATELY RECEDING DAYS FOR THE PURCHASE OF 24 JACKPOT COMBINATION TICKETS, WHICH ENTAILED SIZABLE AMOUNTS VARYING GENERALLY BETWEEN RS.2,000/- AND RS.3,000/-, (IV) THE ASSESSEES CAPI TAL ACCOUNT WAS CREDITED WITH THE GROSS AMOUNT WITHOUT SHOWING ANY EXPENSES AND PURCHASES OF TICKE TS OR FOR LOSSES, (V) IN VIEW OF THE EXCEPTIONAL LUCK CLAIMED TO HAVE BEEN ENJOYED BY TH E ASSESSEE, HER LOSS OF INTEREST IN RACES FROM 1972 WAS VERY SIGNIFICANT. THE SETTLEMENT COMMISSIO N TOOK THE VIEW THAT ONE WOULD NOT LOSE INTEREST IN RACE FROM 1972 AND INCOME YIELDING ACTI VITIES MERELY BECAUSE THE INCOME FROM THAT SOURCE BECOMES CHARGEABLE TO TAX. WHEN THE MATTER W ENT BEFORE THE SUPREME COURT, IT DISMISSED THE APPEAL OF THE ASSESSEE. FROM THE FACTS OF THIS CASE, IT IS APPARENT THAT THIS CASE DOES NOT RELATE TO THE CASE WHERE THE ASSESSEE HAS TAKEN LOAN FROM ANY PARTIES BUT IT IS A CASE WHERE THE ASSESSEE HIMSELF HAS SHOWN THE INCOME FROM A PARTICULAR SOUR CE AND INCOME SHOWN BY THE ASSESSEE WAS NOT FOUND TO BE GENUINE. THIS CASE, IN OUR OPINION, WILL NOT ASSIST THE REVENUE. 33. THE LEARNED DR ALSO RELIED ON THE DECISION OF T HE SUPREME COURT IN THE CASE OF CIT VS. P. MOHANKALA (SUPRA). WE HAVE GONE THROUGH THIS DECISI ON. WE NOTED FROM THIS DECISION THAT THIS DECISION SPEAKS OF THAT IN THE CASE OF SECTION 68, THE BURDEN IS ON THE ASSESSEE TO PROVE THE CASH CREDITS. THIS FACT, IN OUR OPINION, IS NOT DENIED. THE BURDEN IS ON THE ASSESSEE TO PROVE THE CASH CREDIT BY ADDUCING THE EVIDENCE ABOUT THE NATURE AN D SOURCES OF THE CASH CREDIT. THIS JUDGMENT ALSO STATES THAT ONCE THE ASSESSEE OFFERED THE EXPL ANATION, THE OPINION OF THE ASSESSING OFFICER OF NOT ACCEPTING THE EXPLANATION OFFERED BY THE ASSESS EE AS NOT SATISFACTORY IS REQUIRED TO BE BASED ON PROPER APPRECIATION OF MATERIAL AND OTHER ATTEND ING CIRCUMSTANCES AVAILABLE ON RECORD. THE OPINION OF THE ASSESSING OFFICER IS REQUIRED TO BE FORMED OBJECTIVELY WITH REFERENCE TO THE MATERIAL ON RECORD. THE APPLICATION OF MIND IS SINE QUA NON FOR FORMING THE OPINION. THE ASSESSEE 25 IN THE CASE BEFORE US HAS SUBMITTED ALL THE EVIDENC ES WHAT CAN BE EXPECTED FROM THE PERSON UNDER THESE FACTS. THEREFORE, ON THE FACTS, THIS DECISION , IN OUR OPINION, WILL NOT ASSIST THE REVENUE. 34. WE HAVE ALSO GONE THROUGH THE DECISION IN THE C ASE OF CIT VS. DIVINE LEASING AND FINANCE LTD. AND OTHERS (SUPRA). THIS DECISION, IN OUR OPINION, WILL ALSO NOT BE APPLICABLE TO THE FACTS OF THE CASE BEFORE US, RATHER, WE ARE OF THE OPINION THAT THIS DECISION WILL HELP THE ASSESSEE. THIS DECISION CLEARLY STATES THAT IT IS THE DUTY OF THE ASSESSING OFFICER TO INVESTIGATE THE CREDITWORTHINESS OF THE SHARE HOLDERS AND IN CASE S HARE HOLDERS FAIL TO RESPOND TO THE NOTICE ISSUED BY THE ASSESSING OFFICER, THE ASSESSING OFFICER SHO ULD NOT TAKE AN ADVERSE INFERENCE ON THE BASIS OF THE NON-RESPONSE OF THE NOTICE. THE FACTS OF THE CASE BEFORE US ARE SIMILAR TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. ORISSA CORPORATION PVT. LIMITED (SUPRA). IN THIS CASE, THE INCOME-TAX OFFICER DID NOT ACCEPT THE ASS ESSEES ACCOUNTS SHOWING CASH CREDITS WHICH WERE SHOWN TO HAVE BEEN RECEIVED BY WAY OF LOANS FR OM THREE INDIVIDUAL CREDITORS. THE INCOME- TAX OFFICER TREATED THE ENTIRE AMOUNT AS UNPROVED C ASH CREDIT AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. ON APPEAL, THE TRIBUNAL TOOK THE V IEW THAT THE ASSESSEE COULD NOT PRODUCE THOSE PERSONS ALLEGED TO BE CREDITORS, BUT IT DID NOT FOL LOW AUTOMATICALLY THAT AN ADVERSE INFERENCE SHOULD BE DRAWN THAT THE AMOUNT REPRESENTED UNDISCL OSED INCOME OF THE ASSESSEE. THE CREDITORS THEMSELVES WERE INCOME-TAX ASSESSEES. IN THESE CIRC UMSTANCES, THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ASSESSEE HAD DISCHARGED THE BUR DEN THAT LAY ON HIM. IN THESE CIRCUMSTANCES, THE HONBLE COURT HELD THAT THE TRIBUNALS CONCLUSI ON WAS NOT UNREASONABLE OR PERVERSE. THIS DECISION OF HONBLE SUPREME COURT IS FOUND APPLICAB LE TO THE CASE BEFORE US. 26 35. IN THE CASE OF DCIT VS. ROHINI BUILDERS 256 ITR 360 (GUJ.), THE FACTS ARE THAT DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE H AD TAKEN LOANS FROM VARIOUS PARTIES AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE HAD FURNISHED THE LOAN CONFIRMATIONS GIVING FULL ADDRESSES, GIR NUMBERS/PERMANENT ACCOUN T NUMBERS ETC. OF ALL THE DEPOSITORS. THE ASSESSING OFFICER ISSUED SUMMONS TO SOME OF THE CRE DITORS AND ALSO CONDUCTED INQUIRIES INTO THE GENUINENESS OR OTHERWISE OF THE LOANS TAKEN BY THE ASSESSEE. ULTIMATELY, THE ASSESSING OFFICER MADE AN ADDITION OF RS.12,85,000/- TO THE RETURNED INCOME OF THE ASSESSEE, WHICH WAS CONFIRMED BY THE CIT(A). ON FURTHER APPEAL, THE TRIBUNAL HELD THAT THE PHRASEOLOGY OF SECTION 68 OF THE ACT WAS CLEAR THAT THE LEGISLATURE HAS LAID DOWN THAT I N THE ABSENCE OF A SATISFACTORY EXPLANATION, THE UNEXPLAINED CASH CREDIT MAY BE CHARGED TO INCOME-TA X AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR, THAT THE LEGISLATIVE MANDATE IS NOT IN TERMS OF THE WORDS SHALL BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PR EVIOUS YEARS, THAT THE UNSATISFACTORINESS OF THE EXPLANATION DOES NOT AND NEED NOT AUTOMATICALLY RESULT IN DEEMING THE AMOUNT CREDITED IN THE BOOKS AS INCOME OF THE ASSESSEE. THE TRIBUNAL FOUND THAT THE ASSESSEE HAD DISCHARGED THE INITIAL ONUS WHICH LAY ON IT IN TERMS OF SECTION 68 BY PROV ING THE IDENTITY OF THE CREDITORS BY GIVING THEIR COMPLETE ADDRESSES, GIR NUMBERS/PERMANENT ACCOUNT N UMBERS AND THE COPIES OF ASSESSMENT ORDERS WHEREVER READILY AVAILABLE, THAT IT HAD ALSO PROVED THE CAPACITY OF THE CREDITORS BY SHOWING THAT THE AMOUNTS WERE RECEIVED BY THE ASSESSEE BY A CCOUNT PAYEE CHEQUES DRAWN FROM BANK ACCOUNTS OF THE CREDITORS AND THE ASSESSEE WAS NOT EXPECTED TO PROVE THE GENUINENESS OF THE CASH DEPOSITED IN THE BANK ACCOUNTS OF THOSE CREDITORS B ECAUSE UNDER LAW THE ASSESSEE CAN BE ASKED TO PROVE THE SOURCE OF THE CREDITS IN ITS BOOKS OF ACC OUNT BUT NOT THE SOURCE OF THE SOURCE. THUS, TAKING INTO CONSIDERATION THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, AND, IN PARTICULAR THE FACT THAT THE ASSESSING OFFICER HAD NOT DISALLO WED THE INTEREST CLAIMED/PAID IN RELATION TO 27 THESE CREDITS IN THE ASSESSMENT YEAR UNDER CONSIDER ATION OR EVEN IN THE SUBSEQUENT YEARS, AND TAX HAD BEEN DEDUCTED AT SOURCE OUT OF THE INTEREST PAI D/CREDITED TO THE CREDITORS, THE TRIBUNAL HELD THAT THE DEPARTMENTAL AUTHORITIES WERE NOT JUSTIFIE D IN MAKING THE ADDITION OF RS.12,85,000/-. THE HONBLE HIGH COURT DISMISSED THE APPEAL OF THE DEPA RTMENT. HONBLE SUPREME COURT ALSO DISMISSED THE SPECIAL LEAVE PETITION. THIS DECISION CLEARLY LAYS DOWN THE PROPOSITION THAT THE ASSESSEE IS NOT REQUIRED TO PROVE THE SOURCE OF SOU RCE. THE ASSESSEE CAN BE ASKED ONLY TO PROVE THE SOURCE OF THE CREDIT. THIS DECISION, IN OUR OPI NION, IS CLEARLY APPLICABLE TO THE FACTS OF THE CAS E BEFORE US. THE ASSESSEE IN THE CASE BEFORE US HAS D ULY DISCHARGED HIS ONUS BY FILING THE CONFIRMATION, ADDRESS, PERMANENT ACCOUNT NUMBER AND THE COPY OF BANK ACCOUNT OF THE CREDITOR, COPIES OF ACKNOWLEDGEMENT FOR FILING THE RETURNS OF INCOME ETC. 36. WE HAVE ALSO GONE THROUGH THE DECISION IN THE C ASE OF CIT VS. JOHRIMAL GOEL, 147 TAXMAN 448 (ALL.) IN THIS CASE, THE ASSESSING OFFIC ER FOUND TWO DEPOSITS IN THE BOOKS OF ACCOUNT OF ASSESSEE IN THE NAME OF HIS DAUGHTERS. THE ASSES SING OFFICER ASKED THE ASSESSEE TO EXPLAIN THESE DEPOSITS. THE ASSESSEE EXPLAINED THAT THE AMO UNTS WERE PAID BY THE TWO LADIES THROUGH CHEQUE AND THAT BOTH OF THEM HAD BEEN ASSESSED TO T AX UNDER THE AMNESTY SCHEME. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAD INTRODUCED HIS BLACK MONEY BY FILING VOLUNTARY RETURNS OF HIS DAUGHTERS AND, THEREFORE, ADDED THE AMOUNTS AS HIS INCOME UNDER SECTION 68. THE CIT(A) TOOK THE VIEW THAT THE TWO LADIES CR EDITED THE AMOUNT IN THEIR BANK ACCOUNT IN MARCH, 1986. THEREFORE, IF THE ASSESSING OFFICER WA S OF THE VIEW THAT THE LADIES DID NOT HAVE ANY INDEPENDENT SOURCE OF INCOME AND THE TWO BANK ACCOU NTS ACTUALLY BELONGED TO THE ASSESSEE THEN PROPER COURSE FOR THE ASSESSING OFFICER WAS TO ADD ENTIRE AMOUNTS OF DEPOSITS IN THEIR BANK ACCOUNTS IN THE HANDS OF THE ASSESSEE AND THE PROVI SIONS OF SECTION 69 WOULD HAVE BEEN ATTRACTED AND THE CORRECT ASSESSMENT YEAR WOULD HAVE BEEN 198 6-87 AND NOT THE RELEVANT ASSESSMENT YEAR 28 1987-88. THE TRIBUNAL CONFIRMED THE ORDER OF CIT(A) . WHEN THE MATTER WENT BEFORE THE HIGH COURT, THE HIGH COURT HELD AS UNDER :- UNDER SECTION 68 IF ANY SUM IS FOUND CREDITED IN T HE BOOKS OF ACCOUNT OF THE ASSESSEE AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE C HARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. THERE FORE, WHAT HAS TO BE ENQUIRED INTO BY THE ASSESSING AUTHORITY IS ABOUT THE NATURE AND SOURCE OF THE DEPOSIT. IF THE EXPLANATION WITH REGARD TO NATURE AND SOURCE IS FOU ND UNSATISFACTORY, ONLY THEN THE AMOUNT SO CREDITED MAY BE TREATED AS INCOME. IN THE INSTANT CASE, THE ASSESSEE OFFERED THE EXPLANATION BOTH ABOUT THE NATURE AND S OURCE OF THE MONEY. IT WAS EXPLAINED THAT THE MONEY WAS DEPOSITED BY THE TWO L ADIES, WHICH THEY HAD DEPOSITED AFTER WITHDRAWING FROM THEIR BANK ACCOUNT . THE COMMISSIONER (APPEALS) AND THE TRIBUNAL HAD FOUND THAT THE ASSES SEE HAD DISCHARGED HIS BURDEN IN PROVING THE SOURCE OF THE MONEY, WHICH HAD FLEW FROM THE BANK ACCOUNT. IT WAS FURTHER HELD THAT IN ADDITION TO THE SOURCE OF MONE Y FROM THE BANK ACCOUNT, BOTH THE LADIES WERE THE INCOME-TAX ASSESSEES AND ASSESS ED TO TAX UNDER THE AMNESTY SCHEME AND THE AMOUNT DEPOSITED IN THEIR BANK ACCOU NT WAS AS A RESULT OF THEIR DISCLOSURE OF INCOME UNDER THE AMNESTY SCHEME. THE COMMISSIONER (APPEALS) AND THE TRIBUNAL FOUND THE EXPLANATION SATISFACTORY AND, ACCORDINGLY, DELETED THE ADDITION. IT WAS NOT A CASE WHERE THE ASSESSEE CLAIMED ANY IMMUNITY FROM TAX ON ACCOUNT OF THE DISCLOSURE OF INCOME BY THE TWO L ADIES. IT WAS A CASE WHERE THE ASSESSEE WAS ASKED TO EXPLAIN THE DEPOSITS IN HIS B OOKS OF ACCOUNT ABOUT THE NATURE AND SOURCE, WHICH THE ASSESSEE HAD EXPLAINED . THE ASSESSING AUTHORITY HAD NOT ACCEPTED THE EXPLANATION BUT THE COMMISSIONER(A PPEALS) AND THE TRIBUNAL HAD ACCEPTED THE EXPLANATION. THE FINDING OF THE TR IBUNAL WAS A FINDING OF FACT IN THAT REGARD AND IT WAS NOT SHOWN THAT THE FINDING R ECORDED BY THE TRIBUNAL WAS PERVERSE. VARIOUS COURTS HAVE HELD THAT THE ASSESSEE HAS TO PROVE THREE CONDITIONS : (1) IDENTITY OF THE CREDITOR (2)CAPACITY OF SUCH CR EDITOR TO ADVANCE MONEY, AND (3) GENUINENESS OF THE TRANSACTIONS. IF ALL THE AFORESA ID THREE CONDITIONS ARE PROVED, THE BURDEN WOULD SHIFT ON THE REVENUE TO PROVE THAT THE AMOUNT BELONGED TO THE ASSESSEE. IT HAS BEEN HELD BY THE VARIOUS HIGH COUR TS THAT THE ASSESSEE CANNOT BE ASKED TO PROVE THE SOURCE OF SOURCE OR THE ORIGIN O F DEPOSIT. UNDER THE AMNESTY SCHEME, THE NEW TAX PAYERS WERE ALLOWED TO DECLARE THEIR INCOME FOR VARIOUS YEARS AND THEIR RETURNS WE RE ALLOWED TO BE ACCEPTED WITHOUT ANY CHARGE OF PENALTY AND INTEREST. IT APPE ARED THAT BOTH THE LADIES HAD FILED RETURNS UNDER THE AMNESTY SCHEME DECLARING CE RTAIN INCOME AND AS A RESULT OF SUCH DECLARATION, SAVINGS HAD BEEN DEPOSITED IN THE BANK ACCOUNT WHICH HAD BEEN SUBSEQUENTLY PAID TO THE ASSESSEE. THERE WAS N O DISPUTE THAT THE INCOME-TAX 29 RETURNS UNDER THE AMNESTY SCHEME IN THE CASE OF BOT H THE LADIES HAD BEEN ACCEPTED. FURTHER, THERE WAS NO ERROR IN THE ORDER OF THE TR IBUNAL WHERE THE TRIBUNAL HELD THAT IN CASE THE AMOUNT DEPOSITED IN THE BANK ACCOUNT OF THOSE TWO LADIES WERE TO BE TREATED AS THE AMOUNT BELONGING T O THE ASSESSEE AND THE DEPOSITS MADE BY THE ASSESSEE, THEN IT WOULD BE A CASE OF IN VESTMENT MADE BY THE ASSESSEE IN THE NAME OF THOSE TWO LADIES AND THE PROVISION O F SECTION 69 WOULD APPLY AND NOT SECTION 68 AND FOR THAT PURPOSE THE FINANCIAL Y EAR WOULD BE RELEVANT AND THEN SUCH INVESTMENT MIGHT BE DEEMED TO BE THE INCOME OF THE ASSESSEE OF SUCH FINANCIAL YEAR WHICH WOULD FALL IN THE ASSESSMENT Y EAR 1986-87 AND NOT 1987-88. SECTION 68 APPLIES WHEN THE AMOUNT IS FOUND DEPOSIT ED IN THE BOOKS OF ACCOUNT OF AN ASSESSEE AND NOT IN THIRD PARTY. DEPOSIT IN THE ACCOUNT OF BANK WOULD AMOUNT TO INVESTMENT AND SECTION 69 WOULD APPLY AND NOT SE CTION 68. IN OUR OPINION, THE CASE OF THE ASSESSEE IS DULY CO VERED BY THE DECISION OF JURISDICTIONAL HIGH COURT WHICH WE ARE BOUND TO FOLLOW AND ON THE BASIS OF THIS DECISION ITSELF, WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT(A) DELETING THE ADDITION MADE IN RESPECT OF CASH CREDIT BY THE ASSESSING OFFICER IN THE YEAR UNDER CONSIDERATION AND SIMILARLY, NO INTERFERENCE IS CALLED FOR IN DELETION OF DISALLOWA NCE MADE OUT OF THE INTEREST PAID ON THESE DEPOSITS. THE DECISION GIVEN BY THE CIT(A) IS DULY SUPPORTED BY THE DECISION OF JURISDICTIONAL HIGH COURT, DECISION IN THE CASE OF ROHINI BUILDERS (SUPRA) AS WELL AS THAT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. ORISSA CORPORATION PVT . LTD. (SUPRA). WE ACCORDINGLY, DISMISS GROUND NO. 3 TAKEN BY THE REVENUE. 37. GROUND NO. 4 RELATES THE DELETION OF ADDITION O F RS.26,74,671/- MADE U/S. 45(2) OF THE INCOME-TAX ACT.. THE ASSESSING OFFICER NOTICED THA T THE ASSESSEE HAD PURCHASED A LAND AT BASAI ON 08.02.2001 FROM SHRI CHETAN KUMAR S/O SRI HARSH KUMAR BANSAL. THE ASSESSEE IS CLAIMED TO HAVE SOLD THE LAND IN TWO PARTS ON 04.04.2005, ONE PART MEASURING 261.73 MTR. TO SHRI ASHISH MITTAL AND OTHER PART MEASURING 215.06 SQ. MTR. TO SH. GURMEET SINGH. THE ASSESSING OFFICER 30 NOTICED THAT IF THE CLAM OF ASSESSEE THAT INCOME FR OM SALE OF LAND HELD BY HIM AS CAPITAL ASSETS IS TAXABLE UNDER HEAD INCOME FROM BUSINESS, IS ACCEPTE D THEN PROVISIONS OF SECTION 45(2) WILL BE ATTRACTED.. THE ASSESSEE HAD PURCHASED THE LAND AS HIS ASSET AND HAS BEEN SHOWING IT AS SUCH TILL 31.03.2005. IT IS IN THE YEAR 2005-06, THE ASSESSEE STARTED BUSINESS OF REAL ESTATE AND STARTED SELLING HIS LAND AFTER CONVERTING THE SAME INTO PLO TS, I.E. THE ASSESSEE HAS CONVERTED HIS CAPITAL ASSETS INTO STOCK IN TRADE IN THE YEAR 2005-06 AND THEREFORE, CAPITAL GAINS AS PER SECTION 45(2) HAS TO BE WORKED OUT. THE ASSESSING OFFICER, THEREFORE , COMPUTED THE CAPITAL GAINS AS PER SECTION 45(2) OF THE ACT AS UNDER : STEP 1. TOTAL AREA OF LAND 261.73 + 215.06 = 476 .79 MT. STEP 2. COST OF LAND AS SHOWN BY ASSESSEE IN HIS R ETURN FOR DIFFERENT YEARS 1,52,000/- STEP 3. AS THE LAND WAS SOLD IN THE YEAR 05-06, TH E INDEX COST OF ACQUISITION COMES TO 1,86,069/ - 1,52,000 X 497 406 STEP. 4. ON THE DATE OF CONVERSION, RATE OF LAND AS NOTIFIED BY DISTRICT AUTHORITIES WS RS.1400 PER SQ. MTR. SO VALUE OF STOCK IN TRADE WHI CH WAS SOLD DURING THE YEAR UNDER CONSIDERATION ON THE DATE OF CONVERSION WORKS OUT TO RS.28,60,740/- (6000X476.79) STEP 5. THUS, THE LONG TERM CAPITAL GAIN AS PER PRO VISIONS OF SECTION 45(2) COMES TO RS.26,74,671/- - (2860740 146069). THE ASSESSING OFFICER ADDED THE LONG-TERM CAPITAL G AINS AT RS.26,74,671/-. 38. THE CIT(A) HAS DELETED THE ADDITION OBSERVING AS UNDER : 4.4. I HAVE PERUSED THE ASSESSMENT RECORD, ASSESSM ENT ORDER AND REMAND REPORT OF THE ASSESSING OFFICER AS WELL AS T HE WRITTEN SUBMISSIONS MADE BY 31 THE APPELLANT ALONGWITH DETAILS AND DOCUMENTS ANNEX ED THEREWITH. I FIND THAT THE ASSESSEE PURCHASED LAND AT BASAI IN TWO PARTS (413. 41 + 413.41 SQ. M.) RS.3,04,000 FROM CHETAN KUMAR AND PUNEET KUMAR AND THE SAME DULY APPEARS IN THE BALANCE SHEET AS STOCK IN TRADE, OUT OF WHICH H E SOLD THE LAND MEASURING 413.41 SQ. M. TO ASIF AHMED IN ASSESSMENT YEAR 2003 -04 FOR RS.1,52,000 AND BALANCE LAND OF 413.41 SQ. M. COSTING RS.1,52,000 W AS SOLD TO SHRI GURMEET SINGH OR RS.4 LAKH AND ASHISH MITTAL AND RAJEEV MIT TAL ON 4.4.2005 FOR RS.6 LAKHS. THUS THE TOTAL SALE PRICE FETCHED BY THE ASS ESSEE AT RS.10,00,000 IN RESPECT OF THE SAID LAND RESULTING INTO PROFIT OF RS.10,00, 000-1,52,000 = 8,48,000. FROM THE PERUSAL OF THE SAME, IT WILL REVEAL THAT THIS A DDITION HAS BEEN MADE ON ASSUMPTION AND PRESUMPTION AND WITHOUT APPRECIATION OF FACTS CORRECTLY. AFTER VERIFICATION OF THE DOCUMENTS AND OTHER DETAILS FOU ND ON RECORD, I AM OF THE VIEW THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKI NG ADDITION OF RS.26.74,671/- AND TREATING THE SAME AS CAPITAL GAINS. THE CONTENTION OF THE APPELLANT APPEARS TO BE CORRECT WHEN HE POINTS OUT THAT IF THE CALCULATION OF THE ASSESSING OFFICER OF CONVERSION OF LAND AT STOCK IN TRADE IS ADOPTED AS ON 01.04.2005 AT RS.28,60,740/- THEN AFTER DEDUCTING SALE PRICE OF RS.10 LAKH THERE WILL BE BUSINESS LOSS OF RS.18,60,740/- WHICH WILL BE ADJUSTED AGAINST PROFI T OF CAPITAL GAIN AS ON 01.04.2005 AT THE RATE OF CONVERSION OF RS.26,74,67 1/- IN THAT CASE ASSESSABLE CAPITAL GAIN WILL BE LESSER RS.8,13,971 THAN BUSINE SS PROFIT OF RS.8,48,000/- SHOWN BY THE APPELLANT AS SECTION 50C IS NOT APPLICABLE T O THE TRADERS OF LAND. IT IS APPLICABLE TO INVESTORS FOR THE PURPOSE OF COMPUTAT ION OF CAPITAL GAINS ONLY. LOOKING TO THE FACTS, DOCUMENTS AND DETAILS PLACED ON RECORD, I HEREBY DELETE THE ADDITION OF RS.26,74,671/-. 39. WE HAVE HEARD BOTH THE PARTIES AND HAVE GONE TH ROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSING OFFICER WHILE SE NDING THE REMAND REPORT HAS NOT MADE ANY COMMENTS ON THE WRITTEN SUBMISSIONS OF ASSESSEE THA T THE ASSESSEE IS A DEALER IN REAL ESTATE AND NOT AN INVESTOR AND THEREFORE, THE PROVISIONS OF SE CTION 50C ARE NOT ATTRACTED IN HIS CASE AND THAT THE LAND WAS KEPT AS STOCK IN TRADE SINCE THE VERY BEGINNING, AS IT WAS A BUSINESS ASSET. THE LEARNED DR ALSO DID NOT REBUT THE CATEGORICAL FINDI NG GIVEN BY THE CIT(A) THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE EXCUSE U/S. 45(2) WHICH RESULTS INTO LOSS OF REVENUE. IN THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND NO MATERIAL ON RECORD WHICH MAY LEAD US TO INTERFERE IN THE ORDER OF LEARNED CIT(A). THUS, THIS GROUND IN REVENUES APPEAL IS DISMISSED. AS A RESULT, THE APPEAL OF REVENUE STANDS DISMISSED . 32 ITA NO. 294, 295, 296 & 297 /AGRA/2009 40. IN THE RESULT THE APPEAL OF REVENUE FOR A.Y. 20 03-04 IS PARTLY ALLOWED AND THOSE FOR ASSESSMENT YEARS 2004-05, 2005-06 AND 2006-07 STAND DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 18.3.11 . SD/- SD/- (H.S. SIDHU) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 18 TH MARCH, 2011 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY